Back to 9th Cir. Drawing Board for CA Royalties

(CN) – A law that lets artists collect resale royalties when their works appear anywhere from Sotheby’s to eBay faces review by the full 9th Circuit, the court said. Artists brought their challenge of the California Resale Royalties Act with three separate suits in 2011, but the 9th Circuit’s decision Thursday to rehear the case en banc spells further delays in their quest for 5 percent royalties on resales. Parties to the lawsuit included painter and photographer Chuck Close, 73, known for his massive-scale photorealist portraits; artist Laddie John Dill; heirs of California sculptor Robert Graham; and the foundation for painter and printmaker Sam Francis. U.S. District Judge Jacqueline Nguyen ruled for eBay, Sotheby’s and Christie’s in 2012, striking down the royalties law as violating the commerce clause of the U.S. Constitution. Because the Resale Royalties Act effectively controlled commerce outside California, affecting businesses incorporated in New York, Nguyen said the law could not survive its “offending provisions,” even if other parts of the statute were lawful. “Were the court to merely to sever the extraterritorial provisions of the statute, it would create a law that the legislature clearly never intended to create,” Nguyen wrote. A three-judge panel with the 9th Circuit considered an appeal of that ruling this past April but surprised the parties in August with a call for more briefing instead of the expected opinion. The August order directed the parties to brief the court on whether the case should be heard en banc, and mentioned the possibility of a conflict in case law on the dormant commerce clause. On Thursday afternoon, the court announced that the majority of judges had voted for the en banc rehearing. The panel from the April hearing seemed inclined to rule against California’s law.